Originally Posted by
1201alarm
It sounds really weird to me that a Scandinavian company could get rid of their obligations in Scandinavia (or Europe) with the help of a US court. That would render any European contract law meaningless.
Chapter 11 doesn't get rid of any financial obligations - at least not directly. What it does is give the filer time to get things in order without the immediate threat of creditors seizing their assets and preventing them from continuing operation. Chapter 11 is particularly useful when a business is still viable, but has been caught out by cash flow issues that are preventing them from paying their obligations in a timely manner. This time is generally used to renegotiate various obligations to allow the filers cash flow to improve.
Chapter 11 means assets are still more than obligations so the business is still theoretically viable. Chapter 9 is when there are insufficient assets to meet obligations and usually leads to liquidation of the business.